KIC to target global real estate debt strategy in 2018

The Korean sovereign fund is targeting mezzanine and junior tranches for real estate and infrastructure debt.

Namkeun Lim, director of the real estate and infrastructure team at Korea Investment Corporation, told PDI that the sovereign wealth fund plans to increase its mezzanine and junior debt exposure across real assets.

“We have more room to commit to debt investments next year as our real asset portfolio has been focused on equity commitments,” Lim said.

“Chinese NPLs are not in our consideration as we see operational difficulties in addition to their transparency issue.” Namkeun Lim, Korea Investment Corporation

He also told industry participants that KIC is expanding its real estate exposure in the US with a focus on commercial buildings including hotels and offices at a discussion on building a global portfolio at PERE’s Global Investor conference in Seoul.

“Considering the mature [real estate] debt market in North America, our regional focus will be the US over the course of years, but we are also willing to seek opportunities across Asia-Pacific, if any,” he said.

KIC opened its Singapore office in September to diversify its real asset portfolio targeting Australia, New Zealand and India and for better deal sourcing opportunities.

“Our investment coverage within Asia-Pacific includes Australia, India and Southeast Asia with flexible investment approaches to both equity and debt commitments,” Lim noted.

Asked whether KIC has exposure to Chinese real estate non-performing loans and secondary loans, he said: “Chinese NPLs are not in our consideration as we see operational difficulties in addition to their transparency issue.”

Within its real asset portfolio, KIC currently holds about 50 percent of assets in North America, 25 percent in Europe and another 25 percent across Asia-Pacific with a focus on commercial buildings, hotels and warehouses across Japan, Australia and China.

Its overall alternative investment allocation accounts for 11.9 percent of its total assets under management totaling $122.3 billion as of end-June, according to a statement from KIC.

KIC’s property and infrastructure portfolio was worth $57 billion as of end-2016. Its overall portfolio target return rate is over 8 percent per annum.